The Hindu Business Line : G-sec auctions devolve on PDs

Bond prices weakened as the Reserve Bank of India set a lower than expected cut off price for the auction of the 7.94 per cent-14 year-2021 paper. The paper devolved on primary dealers as there were not too many takers for it. Prices opened higher, but moved down as news of devolvement spread in the market. This caused some panic in the bond market said a dealer with a private bank.

Total traded volumes in the bond market were Rs 5,900 crore (Rs 3,455 crore). The 8.24 per cent-10 year-2018 paper opened at Rs 98 (8.55 per cent YTM) and closed at Rs 97.73 (8.59 per cent YTM), against the previous close of Rs 97.87 (8.61 per cent YTM). The 7.95 per cent -24 year -2032 paper opened Rs 88.75 (9.11 per cent YTM) and closed at Rs 88.50 (9.14 per cent YTM), against the previous close of Rs 88.55 (9.13 per cent YTM).

The bearish sentiment is likely to persist next week as well, the dealer said. “The RBI is not comfortable with excess money supply because it will lead to inflationary pressures. So, the RBI may announce huge MSS auctions or even a hike in CRR, before the next monetary policy,” he said. –

Our Bureau

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